Sunday, December 30, 2007

Warren Buffett is getting into the Municipal Bond insurance business. And if you are a municipality, you can either pay the premium to Buffett for the AAA rating, or you can fore go Buffett's fee and skip the insurance entirely.

Or you can call up beleaguered Ambac or MBIA for insurance, who want to charge you higher rates while having suspect capital backing their ratings.

It's a brilliant move on Buffett's part. Ambac and MBIA better raise more capital, and in a hurry, or they'll be a ghost of their former selves.

Monday, December 24, 2007

It seems that these dolls are now the must have gifts for young girls. Their stores in Chicago, NY and LA are always crowded, and now they have bistros in Atlanta and Dallas. The dolls sell for $89, and they have many "must have" accessories. The Limited Edition "retired" dolls "sell" on eBay for more than it cost on retail, so some Mom's talk about the "investment" attributes of these dolls, while the "Just like You" dolls look like the young girl.

Mattel's stock has been beaten down on China concerns while domestic toy companies have been doing fabulous business.

I think Mattel's (MAT 20.19) American Girl will do over $300 million in revenue for the 4th quarter and well over $500 million for the year, versus the $440 million of revenue and almost $100 million in net income American Girl generated last year. It should be a bright spot for the company, and may serve as a catalyst to get the stock off the bottom of the charts.

Friday, December 21, 2007

How stupid was Wall Street on this stock? I had to tout this number 5 times in the last 10 days. But Wall Street gave you 16 points on it's earnings! I'll take it! But who sold the stock down in the first place?

Time to catch the amateurs off guard. Wednesday night, Oracle had good earnings, so the NASDAQ was going to ramp higher. Some joker bought the QLD (98.55) in the pre-market Thursday morning at 102 because they didn't take into account that it was going ex-dividend of $5.088. The stock then sold off almost 5 points when these guys realized their mistake! What's that have to do with today?

Well RIMM reported great numbers after the close last night, so the NAZ futures are up 23, and the Dow futures are up 100, and the S&P futures are up 14. The S&P SPDR's (SPY 146.80) closed at 146.80, and they should gap up at least a point. So offer stock out a bit less than a point up and see if you get taken. Some clown will think he's picking up a free 10 or 20 cents. Wrong!

SPY goes ex-dividend this morning, and granted, SPY is considerably deeper than QLD, and players that trade this are considerably more sophisticated. But if you're reading this so early, you may get a chance to short some shares to a clown at a higher price pre-market, and then buy them back from him when he realizes his mistake. It's not $5 but it's a "Free 50 Cent."

The sovereign wealth funds are at it again, this time with Mother Merrill. A few billion here and there and pretty soon we are talking real money. Bernanke's reluctance to cut rates has made these investors his best friend!

But three months ago, when no-one talked about the sovereign wealth funds investments, you had that information here, when they first started picking up the exchanges.

Dubai said it would take a 19.9% stake in the Nasdaq exchange, and the 28% stake in the London Stock Exchange (LSE); then NDAQ would get the Nordic exchange (OMX). But during trading yesterday Qatar spent $1.37 billion buying 20% of the LSE, and $470 million to take down 10% of the OMX, trying to scuttle Dubai's plans. Do you think these sovereign wealth funds are buying stock exchanges if they're not bullish?Abhu Dubai's investment arm, Mubadala Development Co. picked up a 7.5% stake in Carlyle Group for $1.35 billion. Those that think the money from oil just flows into gilded palaces better reasses this global economy. And consider the impact of this money on equity prices around the world.

Remember when Citigroup was "concerned" over Netflix (NFLX 27.24) on December 7 when the stock was 23.57 and they put a sell recommendation on the stock? Here's what I wrote:

"The Postal Service did an audit, and found that sometimes the adhesive flap causes the mail systems to jam, and thus the NetFlix mailer has to be sorted by hand. The Citigroup analyst said that 70% of all Netflix's envelopes did this. (He probably did "channel" checks at the post office.) The Postal service estimates this costs them over $21 million a year; and they would like .17 cent surcharge when the machines jam. (Netflix says they save the Post Office $100 million a year by picking up the returns instead of having them delivered by mail to them.) So the report said if Netflix "has to bear the full brunt of this increase (without other cost offsets), monthly operating income per paying subscriber would fall 67 percent from $1.05 to 35 cents."

Research in Motion (RIMM 102.13) reports after the close, and the stock has been beaten down from 137. Does anybody think that those financials types that are getting laid off won't get another BlackBerry? Are you kidding me? Why do they call them "crackberries?"

I know this is simplistic, but let me give you an anecdote. In July, we had a family reunion, and my brother, who is Mr. Corporate, was either pushed or he jumped into the pool, depending on who was telling the story. Then he remembered his crackberry was in his pocket. His face went from laughter to panic. The next few hours, you saw his BlackBerry, partially disassembled, drying off in the sun, with him checking up on it every 15 minutes, like a Dr. looking for a pulse. I'm surprised he didn't lay hands on it.

Oracle wasn't even dinged in financials services, and the bad news in Bear Sterns was already priced into the stock. Do you think any of the analyst chatter isn't already priced into RIMM?

You could always wait until tomorrow to buy the stock. And buy it above 112, or pick it up here before the BBE (Big Bad Event), which it isn't.

Wednesday, December 19, 2007

"Christmas is the season to watch reruns of old movies. But even before the holiday starts, financial markets are getting into this spirit.

Never mind that analysts are now muttering darkly that 2008 could produce stagflation – a concept that, until recently, seemed as dated as The Sound of Music. In the equity markets, another oldie is now back on investors’ radar screens: equity market volatility."

Now most investors won't get the subtle dig at Bernanke, but I'll let you in on it. Bernanke misspelled the word "edelweiss" at the national spelling bee where he placed 26th. He spelled it with two i's.

And the song "Edelweiss" came from the musical The Sound of Music. Now that we have cartoons, and scholarly digs at Bernanke, I suppose he'll finally catch on, as everyone and his mother is getting tired of the same old story and re-runs from the mouth of the Fed.

But now, the market doesn't even care. The stock market, made a wonderful retest of the lows with the action today. So the bears, who've had the run of the place, will finally feel some pressure as the market trades higher, led by the technology stocks. Oracle came out with good earnings tonight; tomorrow we have RIMM's.

It should be a good couple of days before the final weekend of Christmas shopping.

Not quite the magazine cover indicator, but now it is no secret that the Fed's fumbling is getting priced into stock prices. Remember when Gisele Bundchen wanted to be paid in euros? That marked the bottom in the dollar....

Morgan Stanley (MS 48.07) writes down $9.4 billion for the 4th quarter, and gets $5 billion from China for a 9.9% stake. The market now should re-asses Goldman Sachs (GS 201.51) who made $11.6 billion last year, that sold off on that news? Only investors scared of the future would of sold GS on that news.

Portfolio.com's September issue had a piece on Stephen Feinberg. Here's two quips in the article:

...We try to hide religiously,” he says. “If anyone at Cerberus has his picture in the paper and a picture of his apartment, we will do more than fire that person. We will kill him. The jail sentence will be worth it."

...You probably think you’re smart,” says one former employee. “Now take your brain and mine, take them to the 28th power, and you have Steve Feinberg....

The Federal Reserve might be wise to avoid saying whether weak growth or inflation is the principal focus of its interest-rate deliberations, a Fed policy maker said....Federal Reserve Bank of Philadelphia President Charles Plosser said in an interview the Fed's practice of publicly assessing the "balance of risks" between growth and inflation may convey too much confidence about where it thinks interest rates are headed. "The circumstances have focused my attention on this language issue, particularly the balance of risks, and I suspect people are struggling right now with, 'Okay, maybe we have to think through this a little more carefully than we had before,'" he said....

...Still, Mr. Plosser's comments suggest policy makers are grappling with how they communicate after four months in which markets have often struggled to discern the Fed's message.

At least the ECB said they would have unlimited funds available for European financial institutions at a maximum rate of 4.21%. And at these levels, stock prices are even pricing in the public musings of the Fed.

Monday, December 17, 2007

Ushered in prohibition, and as any student of the depression knows, it was repealed by the 21st Amendment in 1933. And Fed Chairman Bernanke, is an avowed expert on the "depression."

Maybe he studied it too hard. His chairmanship is giving the market depression. At this point, traders living in Washington DC, are probably stopping in at the 18th Amendment, and getting drinks at the Keyhole bar in the basement.

You don't need to be at the keyhole to know what they think of the Fed's latest moves. Just look at the Keyhole Nebulae.

It sure looks like it to me. United Rentals (URI 23.55) had a $34.50 buy out offer scuttled when Cerberus simply just walked away, hoping to just to pay $100 million break up fee.

URI wanted none of that, and took them to court.

Cerberus said that URI's "sole and exclusive" remedy was $100 million if the agreement was breached. That's not what the contract said. The termination fee was URI's "sole and exclusive" remedy if URI terminated the agreement. They didn't. That's what the contract said. It also said that URI was entitled to specific performance. Which means they can compel Cerberus to buy them, at the agreed price.

Cerberus' defense? A scribbled piece of paper, by Cerberus (ie: a hand written note outside of the contract) that says URI's remedy was just $100 million. So Cerberus, scribbles a note, and presents this as "remarkable evidence." It was unremarkable.

URI had already stated they would be "crazy" to present a proposal by Cerberus, to buy the company to the board, if $100 million was just an "option." What does this mean? URI was simply stating, pre-agreement, what Cerberus now wants. I'll give it to you in Wall Street language. No proposal would be presented to the board, if it was just a $100 million "call option"on the company. In other words, if things look good, Cerberus buys you at $34.50. If they are not, they walk away. None of that language was in the merger agreement. That's why URI agreed to the Cerberus proposal. So Cerberus finds a hand written note, outside of the agreement and presents that as evidence.

Remarkable isn't it?

Now URI was denied an "expedited judgement" but it was "exceedingly close." So said presiding court chancellor William Chandler. So the trial gets postponed for one day. Which means Cerberus needs to renegotiate their deal with URI, and for it to be rather close to the original terms. And if the price isn't "exceedingly close" a deal gets done, now.

My interpretation? The deal gets done above $31. And we have an anouncement tomorrow.

Sunday, December 16, 2007

Ignore Friday's "inflation" figures. The deflation in credit and housing, and the strength of the dollar indicate that the inflation figures seen in the CPI and PPI, are "transitory." (Unlike the increase in oil prices which Greenspan said was "transitory.")

If these inflation hawks believe that we are in an inflationary environment, ask them if they are speculating in real estate.

Deflation increase the value of the dollar. And last week, we saw the biggest gain in the greenback in two years.

It's time for the economists to get "transitory" back in their lexicon.

So LUNA, will be ensuring that FPGA's will be trusted. The Pentagon only uses 1% of high performance integrated circuits (IC), when it used to use about 7% of the world's supply. And since the Pentagon is on a budget, they use COTS (commercial-off-the-shelf) components. Fabless IC production makes up about 18% of the industry, while high performance IC's are substantially higher. And nobody wants a "Trojan horse" in a defense department chip.

LUNA will help make sure that it doesn't happen.

LUNA is under followed and under appreciated. It traded as high as $10.45 today, and then pulled back. It's still a good entry point at these levels.

The performance of these numbers are important for two reasons. Just as they were sources of funds when the market was going under liquidation; they are stocks to buy when big money wants to deploy capital. Both stocks have such depth, that they can be used for a source of cash, and a place to hide cash. The momentum stocks rally first, and then traders pick up these. So traders are ready to move into this market on a much bigger scale.

So forget about the PPI and CPI. Go out and buy. The stock market looks forward, the Fed looks backward.

The group's big bet that securities backed by risky home loans would fall in value generated nearly $4 billion of profits during the year ended Nov. 30, according to people familiar with the firm's finances. Those gains erased $1.5 billion to $2 billion of mortgage-related losses elsewhere in the firm. On Tuesday, despite a terrible November and some of the worst market conditions in decades, Goldman is expected to report record net annual income of more than $11 billion...

If it spots opportunity, it can trade Goldman's own capital to make a profit. And when it does, it doesn't necessarily have to share such information with clients, who may be making opposite bets. This year, Goldman's traders did a brisk business handling trades for clients who were bullish on the subprime-mortgage-securities market. At the same time, they used Goldman's money to bet that that market would fall. Some critics say that blending those functions creates a risk that traders could use information about client trades for their firm's own benefit..

I saw George Mitchell pontificating today, and I just wanted to remind people that he lives in a glass house also, but not in the Trump Tower. That's where Andrew Lloyd Webber is dumping his condo on the 59th and 60th floors for $22.5 million, of which he paid $5.5 million for it in 1987. Dolly Lenz ("Jaws" as ex Tyco CEO Dennis Kozlowski called her) had the listing and it was showcased on CNBC last week. Here it is.

What's this have to do with George Mitchell? Go back to the late 90's, when Andrew Webber sold his Eaton Square Mansion for $9.7 million, to Viktor Kozeny, who "tried" to make a run at SOCAR, the State Oil Company of the Azerbaijani Republic. Citizens of Azerbaijan (7.5 MM)would get four vouchers that they could redeem at auction when the various state run businesses were put up for sale. Kozeny told investors he was buying up the vouchers on the streets of Azerbaijan, and he would use them to take control of SOCAR, because he had gotten assurances from President Aliyev that he had the inside track to acquire the company when it went from the state to private hands.

One of his investors, was George Mitchell, who also headed up the Washington lobbying for Kozeny. When Kozeny opened his investment house Minaret in April of 1998, George Mitchell was his guest of honor. Unfortunately no politicians from Azerbaijan showed, and the former majority leader of the United States Senate, couldn't figure out that anything was amiss. In actuality, Kozeny bought up the vouchers, and then sold these "options" that he acquired at .40 cents to investors for $25, profiting to the tune of $73 million, and the investors in Kozeny's deal lost $200 million.

Where did the money go? Some say it was in bribes, and thus, it was better for everything to be swept under the table, and to just count your losses and go home.

In today's climate George S. Mitchell, probably would have been prosecuted. So if your wondering why he thought it was best to leave the ballplayers alone, he probably remembered that baseballs can break glass.

Thursday, December 13, 2007

Vikram Pandit, Citigroup's CEO, was roundly panned by Wall Street yesterday as these analysts said it was just speaking in generalities. He took action today by putting $49 billion of SIV's on it's balance sheet. What will Wall Street say now?

They already predicted C would cut it's dividend to a 30 cent quarterly rate if the SIV's were put on it's balance sheet. It's easy to make worthless projections, when you don't expect it to happen. Now it happened, and the stock will bounce as the SIV uncertainty has been removed.

Pandit understands trading, and he understands Wall Street. Wall Street is more forgiving than most churches, and most baseball investigators: You fess up, and Wall Street cuts you some slack. Today, Citigroup caught some slack.

Why is the Fed's plan good? Here's why. We'll know, by Monday, with the results of the tender if it is working. We know the academics on the Fed, are desperately trying to be sexy. So on Monday, we'll know how they look with their clothes off. And it may not be pretty.

So how is this plan good? Because it will force the Fed to come back to cut the rates they needed to cut in the first place. Short term rates are still too high, for housing to be repaired, and the Fed has been given the benefit of the doubt until we get the results.

So if it fails, that is "sexy." The Fed will have to quit being cute, and start addressing problems more forcibly, instead of with the "cute" gradualism they have adopted. They should of learned from Mr. Greenspan. At least we know how he looked with his clothes off.

But why Jessica Simpson? Because she's ditching her wholesome image for a nude role in a movie. And what works on Hollywood, doesn't work on Wall Street.

So the Fed puts their clothes back on. That's something the market will cheer!

Wednesday, December 12, 2007

Yesterday the Fed blew it. So they wanted a do-over, and they hastily announced their liquidity plan. The ECB, Bank of England, Bank of Canada, Swiss National Bank and the Fed will coordinate lending money to the banks, collateralized by what the banks would have brought to the discount window. Why did they do it this way?

That's what the market was ticked off about. Stock investors want simple answers. The rate that the money will be lent by the Central Banks is the average of the Fed funds rate for the time the loan is out. Let's break this down to simple numbers. The Fed funds rate is at 4.25% and the discount rate is at 4.75%. Using the method that the Fed proposes, banks will be able to borrow at 4.25%, 50 basis points less than the discount rate. So why didn't the Fed just cut the discount rate 75 basis points yesterday, to make it and the Fed funds at the same rate? Then there wouldn't be a "stigma" to borrow from the window because there would be no penalty rate.

Now look at traders positions. Yesterday the bet was the 25 basis point cut wasn't enough. So short the market, and oil and go long bonds. The market gapped up almost 300 points, oil gapped up and ran $4 dollars, and bonds got cratered. The overnight traders got crushed.

And the Fed just looked stupid. They leaked this news last night to Steve Liesman of CNBC. They'll give you some poppycock reason, about releasing it when all markets are open, but the Fed had no intention of releasing this news today, until the market got crushed. They only stated they wanted to make the announcement when the affected market's were open. A factually true but misleading statement. So the timing stank. The Fed, who only wants to move during FOMC meetings, moves immediately after the meeting?

But it will provide some liquidity to the market place. If they cut the discount rate to 4.25%, they would of been overwhelmed. So meter out $40 billion here, $5 billion here, and pretend you're doing things surgically. That will satisfy the academics of the Fed, and be the cover for Bernanke's "exceptionally alert and flexible" statement. But the money is a start. And when the market was down 90, it looked like the bears had over pressed their bets, while the working group on markets stepped in and bought stocks up to the close.

Tomorrow we have Lehman's earnings and inflation figures,and somehow I think they'll both go hand in hand.

Take a look at the link at the bottom of the page. It's a great story. But how much is 100 million pennies worth?

A post 1982 penny is 97.5% zinc and 2.5% copper, and a million dollars of pennies has 538,000 lbs. of zinc, and 13,700 lbs. of copper; with Zn at $1.07 a lb and Cu at $3.03, melted the pennies are worth $621K.

If the pennies are pre 1982, made from 95% copper, then the pennies are worth $2 million.

So donate some pennies, and buy the copper stocks! Freeport-McMoran, (FCX 102.71) backed up 5 yesterday; they'll get those points back. And Lundin Mining (LMC 9.50) is the play on zinc.

What a hoot! Brian Wesbury, of First Trust Advisors, always gets a lot of air time for CNBC. Yesterday, he was asked what was an appropriate target for the fed funds rate. He said 6%!Remember that when he gives his economic viewpoints and mute him.

The best part of the after-the-fact posturing by the Fed, is that financials markets are able to have some transparency on the Fed! Remember the transparency the market gave the $100 billion super SIV? After the light was shined on it, this Super SIV is now down to $30 billion.

It's the same with this Fed. Give them some transparency and then just listen to 30% of what they say!

Telestone Technologies (TSTC 5.40) provides wireless service in Vietnam, Indonesia, Malaysia, Thailand, and India, and today announced sales agreements to hawk their products in Brazil and Mexico. It's a cheap stock, and low priced, and it could get some daytrader action.

August 7th: The Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected

August 10th: The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets.

August 17th: Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.

The Fed did a complete about face, but it took three days. Today it took three hours after the FOMC decision for the Fed to say they had alternative tools and sources. We can fix housing and the credit problems with our money, or we can have the sovereign wealth funds come in and throw it at us. Which they will.

The Fed had the opportunity to change psychology on the market, and on housing. They whiffed. But the market will force their hand. And it did it, knocking rates down by 22 basis points across the board.

So we have our central bankers looking like buffoons. That has to be modeled into stock selection. So we have to trade the stocks that aren't dependent on the Fed to lower rates, and back to technology, whose sponsors are the growth fund buyers, that are oblivious to the Fed.

But at least the market won't be so concerned with every Fed head's blabber. You can discount what they say, because their inconsistency has made them become more of an annoying side show as they appear to be reckless with their words while simultaneously being clueless to current economic conditions.

But I suppose I should of learned my lesson from Bernanke. Before he boosted rates to 5.25%, he had suggested to Maria Bartiroma, that the Fed was done raising rates at 5%. When that story broke, Bernanke had to show that it wasn't just a slip-up, so he took rates up another notch.

And Bernanke, took both rates, and the Fed, down another notch.

But, the Maria Bartiroma story lasted only a couple of days. This may too. The WSJ hinted that the Fed could cut the discount rate in the next few days. The reasoning? You don't need all the FOMC member votes.

Let's hope Bernanke is as thin skinned as last time, and reverse his decision that the drop in the market gave the Fed.

Eric S. Rosengren, the newest member of the Fed was the only one who voted to cut 50 basis points. At least he "gets" it. Here's highlights from a speech he gave October 10:

The recent problems in financial and credit markets reflect a pulling back from what I would call “surrogate securitization,” whereby investors were willing to buy debt that had been assigned high credit ratings by the credit rating agencies, regardless of the underlying assets used in the securitization. In other words, investors basically delegated due diligence to the rating agencies.......Why should this concern not just central bankers, but all of us? Because disruptions in the ability to securitize assets have the potential to affect a much broader set of assets than just subprime loans, and increase the cost and reduce the availability of credit that consumers and businesses rely on......Consider something which may not be a “household term” to the layperson, the London Inter-Bank Offer Rate or LIBOR, which involves short-term borrowing of dollars by banks in Europe. One-month and three-month LIBOR remain very elevated and – here’s the rub – this tightens credit for a variety of U.S. borrowers, since many loans to businesses and many floating rate mortgages are tied to the LIBOR rate...

It's the TED spread that is giving the market fits. Look at three month treasury and three month euro-dollar futures. It's exorbitant! Why the spread? T-bills are risk free, while eurodollars reflect the risk of corporate borrowers. And these spreads continue to widen. So the Fed should have cut the discount rate further.

25 basis points? Are you kidding me? That's exceptional? That's alert? That's flexible? The Fed just does not get it. By not being more aggressive in their cuts, they'll be forced to cut rates much lower than they ever envisioned or wanted. And the bears have until the end of January to restart their rumors.

Lehman Brothers at 62 is a perfect example, down 3.70 on the day. They come out with earnings on Thursday, and there will be whispers about their exposure to the junk they sold to Florida's Local Government Investment Pool. And the stock will go down.

RIMM (102.38) looks like the stock the NASDAQ wants to play with today. ATT's good news will be extrapolated into RIMM. Telephone's average revenue per customer is going up. Why? The iPhone of course. But last time T had good news on the iPhone, RIMM moved as the "derivative" play.

We know they are banking that the Fed will only cut 25 basis points, so they can start attempting to press stocks down again, by reloading and averaging their shorts at higher levels. Is that a viable strategy?

Monday, December 10, 2007

This may help give some perspective to the depth and strength of the US economy.

When you hear the stories about a smidgen of a cent missing in a city or a state's pooled money market account, take a deep breath, and look at this table.

You'll hear the bears scream about the empty condos in Miami. That's easier than saying Finland is going belly up.

We here about Chavez and his oil in Venezuela, and our Government shakes, but last I looked poor old Detroit with all their sub-prime and auto woes is toe to toe with the Bolivarian Republic of Venezuela.

So stay toe to toe with the bears. The battleground, with them, is just about over.

"As I watch the wild gyrations rocking the world’s capital markets, I wonder what it was that I ever liked about this job. I have been an investment manager for nearly a quarter of a century and can recall seeing these types of extremes only twice before, with the 1987 crash and the 1999-2000 technology bubble.

The financial sector is now priced for the worst-case scenario. US 10-year bond yields are well below the dividend yields of strong, well-capitalised companies, notably in the pharmaceutical sector, while almost any US consumer-related stock has fallen dramatically. On any assumption, except prolonged deflation, equities look dirt cheap relative to bonds. The dollar has fallen by more than 40 per cent against the euro and, across financial markets, momentum investors have been handsomely rewarded against value investors. Meanwhile, commodities and emerging markets enjoy close to safe-haven status and trade near all-time highs. US subprime lending to largely uncreditworthy clients will leave a trail of bad debts across working-class America.

But this group of householders is small relative to the size of the US housing market and to the overall economy. Consumption in today’s highly unequal US society is dominated by the nation’s top earners, while the bottom 10 per cent account for less than 1 per cent of total consumption.

The real reasons behind the profound effect on financial markets of the subprime turbulence can be found in the psyche of market participants and observers, notably in their deep distrust of capital markets, which dates from the trauma of the tech bubble.

By the end of the technology bull market the reputation of the entire financial services industry was in tatters. Analysts’ reputations suffered most of all through their conflicts of interest and their reluctance to put sell recommendations on stocks they privately rated in a more derogatory way.

We have come full circle from that heady spring of 2000. “Bubble” is an overused metaphor, but I think commodities and emerging markets occupy almost exactly the space in both investors’ portfolios and their psyches as did tech industries seven years ago.The intellectual foundations of the commodity boom are pretty shaky: even before action on global warming, energy intensity levels in developed countries are declining and there is a tendency over the very long-term of real commodity prices to decline.

Meanwhile, emerging market equities are now rated at parity with their developed market counterparts, despite having far greater historical earnings cyclicality and signs of bubbles in the Chinese and Indian stock markets.

Previous cycles teach us that we should always start with price. While the secular story may be valid, if the price is wrong, stay clear. In the US, the price of its currency, equity markets and even property is very attractive indeed, at least from this European’s jaded perspective. Nasdaq is now selling at about 26 times prospective earnings, compared with well over 100 times in early 2000 and around 50 times currently for the domestic Chinese index. If you think US banks have problems, they are nothing compared with what is most likely buried away in the balance sheets of the big Chinese state-owned banks, which is one reason why the authorities are so reluctant to let the renminbi appreciate.

I believe that the current consensus owes more to the short-term collective psychology and incentive structures of market participants than to an objective long-term analysis of the corporate and economic fundamentals. There have been three key changes.

First, the rise of hedge funds has led to a big increase in shorting. Second, most fund managers are incentivised around, most often, one-year performance. Finally, sell side analysts are now rated more for their buy/sell recommendations than for their detailed company and industry knowledge; their advice is based largely on the predicted reaction of investors to future newsflow than on fundamentals. I have a hunch that we are through the worst of the fear surrounding subprime and that, although the US housing market will continue to deteriorate, the dollar will begin to recover once investors realise that the long-term prognosis for the US economy is actually very good, as evidenced by its high productivity and positive demographic trends.

The almost perfectly correlated long commodity and short dollar trades should soon begin to unravel. Emerging markets are likely to enter a relative decline with sharp divergences in the individual markets. The US is due to begin a long period of outperformance, led by a rising dollar and a sharp rally in financials followed by technology and pharmaceutical sectors.

In early 1999 I told investors to buy Russian equities. In 2001 and 2002 I tried, largely unsuccessfully, to persuade investors to go very long on emerging market equities. My advice now is similar: shut your ears to the cacophony of bearish comment and negative newsflow and think longer-term."

Bruce Berkowitz picked up 6.7 million of WellCare shares for Fairholme funds, and WellCare picked up a couple more contracts. Last week, WCG announced retention agreements in case the company was put in play.

A value stock buyer, Berkowitz has averaged 19% a year since 1999. He has over $1.5 billion in Berkshire Hathaway, the best stock on the big board.

Bottomline: WaMu will add about $3.7 billion of equity to company, and right itself going forward. Like clockwork, the lemmings are selling on the news, and you can pick up the stock under 19 in the after-hours!! FRE, FNM and C all bottomed on the capital raising news.

Does anyone think that the $12 billion invested in the financials today were done in a vacuum with the Fed meeting tomorrow? Most assuredly, the discount rate will be cut at least 25 basis points more than the Fed funds. And I've already made my position clear on how much the Fed will cut tomorrow.

Now I'd expect Merrill Lynch to reign in their bearishness. The reason? Look for these four reasons in their report: 1) Christmas won't be a bust 2) Wall Street is getting a handle on the "value" and pricing of mortgages 3) Risks are priced into stocks, 4) We are re-appraising the risks to the economy commensurate with the more sanguine credit environment.

And the market's will have moved 10% since they got bearish. And without you if you listened.

Mergers. Takeovers. Call them what you want. But there will be a wave of them. The amount of cash that wants to get in on the financial stocks, shows that the bears position has been a canard. Everyday, we see the financials getting a handle on the "writedowns." And somebody will come up with the idea that maybe the writedowns won't be writedowns.

And this, is what the bears are completely unprepared for. They expected take-unders, and going out of business sales. Take-overs and business as usual weren't even in their vocabulary.

Did you miss this Thanksgiving post? PMI was at 10.19, it's now 16.6, up 60%! As advertised!

But here's the way to make money on this news. Mortgage and bond insurers Ambac (ABK 24.14) and MGIC (MTG 19.72) , whose counterparty risk was downgraded by S&P Wednesday, will now have a working model with the rating agencies on how to preserve their credit ratings. Without the ratings they're toast. But the biggest play could be bond insurer PMI Group (PMI 10.19)!

PMI owns 42% of FGIC. Market players may mistakenly think PMI's FGIC got the cash infusion. FGIC and CIFG are just a dyslexia twist away from being the same. (Don't think this doesn't happen. And the huge short base in this stock can cause crazy reactions.) Blackstone and Cypress Group each own 23% of FGIC. And they've already had discussions with the rating agencies about putting at least $200 million into PMI. So it's a buy as this news will soon hit.http://aaronandmoses.blogspot.com/2007/11/thanksgiving-help-for-market.html

"I'd assume Pershing Square is going to get even a bit more publicity the next few days. Yesterday William Ackman announced on CNBC that he would donate his future share of his bet winnings against the mortgage insurers to charity. I'd like to see a ton of money go to The Robin Hood Foundation, but the merry men at Pershing would be better off picking up more shares of Sears, than picking on the mortgage insurers.

Intellectually their argument is sound, except for one caveat. What happens if housing prices stabilize and start going up? Mr. Ackman assumes that by next June, Ambac Financial (ABK 23.41) will be broke. So how is it, that a billionaire can give money to the Pershing Square Foundation and be lauded? His bet only pays off if the poor and sub-prime are displaced, and home values continue their spiral downwards, affecting millions more than his contribution to the charities would benefit. I want the other side."

UBS (50.48) writes down $10 billion in subrime losses, and announces an investment of $9.5 billion into the bank by the Government of Singapore, and $2 billion from an undisclosed "Middle Eastern" investor.

The Daily Telegraph said that China's sovereign wealth fund is teaming up with Blackrock to buy Rio Tinto, a deal that would be in excess of $150 billion dollars.

A few weeks back Goldman Sachs said that the banks sub-prime investment losses could contract lending by $2 trillion dollars. It looks to me like the banks only need to make a phone call to get the capital they need. And sovereign wealth funds, are interested in picking up stocks, while in the U.S. the state run funds have the lowest exposure to US equities in years.

I suppose that makes sense. They put SIV's in the state run pools, to increase returns by a tenth of a percentage point, and those SIV assets are all underwater. So they change their allocation to US equities, because, the reasoning would be, if the SIV's blow up, what will happen to stocks?

Excuse my sarcasm, but I wonder who's on the other side of the phone advising these guys?

Oprah Winfrey, was stumping for Obama, but the most controversial line came from former Atlanta mayor Andrew Young who had this to say about Clinton: "Bill is every bit as black as Barack. He's probably gone with more black women than Barack." Afterwards he said he "I'm clowning" but nobody is touching that line.

Roger King, helped Oprah go national when his company, King World Productions, syndicated her. He also revitalized Jeopardy and Wheel of Fortune. He passed away in Boca Raton this weekend.

His salesmanship in the boardroom is legendary, but what most people don't know is that over ten years ago, he single handedly stopped a melee breaking out at the Chris Evert Tennis Classic, at the Delray Beach stadium.

My landscaper, who sold his home when you were able to in Florida, worked with special needs children, and Roger anonymously assisted him in his work.

He was big, tall, and imposing. Martin Luther King said, "The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy."

Sunday, December 9, 2007

"Sheila Bair, chairman of the Federal Deposit Insurance Corp., suggested hidden financial motives may be coloring the debate over the plan, unveiled by the mortgage industry and endorsed by President Bush this past week....

I do worry that some of the investors have taken short positions on the ABX," an index based on subprime-mortgage-backed securities, Ms. Bair said in an interview...

George P. Miller, executive director of the American Securitization Forum, didn't dispute the notion that some investors who stand to incur losses from looser mortgage terms are opposing the plan. "It's to be expected that an investor's view of this could reflect their position in the capital structure of the investment," he said."

Sinopec signed a $2 billion dollar deal to develop a major Iranian oil field coinciding with the Bush administration admitting their intelligence assertions on Iran's nuclear weapons were wrong. Once again the state owned companies are asserting their dominance in oil.

Exxon, hasn't come to the table in Kazakhastan's Kasaghan, the largest new oil field in the world, nor is Exxon Neftegas selling natural gas from Sakhalin Island to the Russian State, who would then jack up the prices and export it, but instead they are moving the gas to the Chinese at higher prices. But how many companies have the clout of Exxon?

What this means though, is that the oil companies need to get bigger, and they need to expand their reserves, especially while prices of the stocks are down, and they still have an administration friendly to oil. And Devon Energy (DVN 88) would be a great acquisition target.

Saturday, December 8, 2007

Here's a picture of the dome of the Emirates Palace Hotel in Abu Dhabi, where OPEC had it's latest meeting, and decided to hold oil production at current levels. Abu Dhabi, is spending money as quickly as Dubai, and oil prices, are just consolidating at these levels before the next move up.

So another Google billionaire gets married today. Larry Page will marry Lucy Southworth in Sir Richard Branson's private hideaway, a 74 acre spread in the British Virgin Islands called Necker Island. So I'd thought I'd feature GOOG as a stock using the marriage of numbers and the Bible, and show how this indicated the importance of Google as a company, albeit overpriced! At least it will be something Larry and Sergei wouldn't know.

On CNBC Thursday, they had a gentlemen who was called the "prophet of profits" and he said that the numbers in fractals and chaos are predictive elements of the stock market. But he didn't offer up anything to anyone.

So at least I'll offer up some of the techniques and let you decide for yourself. At a minimum you'll probably learn some things about Google, and how to make some sense out of chaos.

But who would use a Bible to pick stocks?

You would have to believe it's the word of G-d!

(And I put this piece in here today just to make people think. In the stock market people are always looking for derivative explanations, and cause and effect relationships. Sometimes they are they, and sometimes they are not; most times they are just used to sell something. It's always up to you to decide the seriousness of it.)

It starts with the first verse in the Bible, "In the beginning G-d created the heaven and the earth." You can see it above. But Hebrew letters, also stand for numbers. So let's just change the letters into numbers, and get to work. (Wait until you have to change the names of the stocks into numbers!) So let me give you just a bit of background data, and we'll get GOOG as a stock "recommendation."

As you can see the seven words of Genesis 1:1 convert into the following seven words, with the following values:

(1) In the beginning=913(2)created=203(3)G-d=86(4)=401(5)the heaven=395(6) and=407(7) the earth=296

Let's do some simple math: Add the number value of the words.1+3=913+86=999= (In the beginning G-d)=(37x27)3+5+6=86+395+407=888=(G-d, and, the heaven)=(37x24)3+5+7=86+395+296=777=(G-d, the heaven, the earth)=(37x21)

Now add the seven words:913+203+86+401+395+407+296=2701The prime factors of 2701 are 37 and 73, thus 37x73=2701So in it's simplest form, creation can be represented by 37x73.Now if we take 2701, and reverse it we have 1072. Now add them together. 2701+1072=3773

Now 3.333333333 cubed=37.037037and 9.999999999 cubed=999.99999and the number of the earth, the 7th word is 296and 6.666666666 cubed=296.296296, and the earth revolves around the sun in space at 66,666 miles per hour, and 37.037037 +296.29629=333.333333.

Issac Asimov said, that if G-d had wanted to prove himself, he would of put pi in the Bible, as the two most important numbers in our universe are probably pi and e, the mathematical constant. But pi is found in the first verse. Just multiply the value of the letters that make up Genesis 1:1 x the number of the letters (28) divided by the value of the words multiplied x the number (7) of words, and you have pi.

Here it is:90x200x1x5x400x1x6x40x10x40x300x5x400x1x40x10x5x30x1x200x2x400x10x300 x1x200x2x28 (the letters value of Gen 1:1 multiplied x28). Divide this by296x407x395x401x86x203x213x7 (the word values multiplied x 7) and you get=3.1415x10^17 or pi.

So the creation, of Genesis 1:1, in it's simplest form, adds to 2701, which can be expressed by it's prime factors 37x73.

Here's a table of Hebrew letters, and their numerical equivalents. Creation is defined, numerically in Genesis 1:1, as the prime factors of 2701, which is 37x73. Biblically, we read that "the world was created by wisdom."

Wisdom in Hebrew is he mem kaph cheth, with numerical values of 8, 20, 40, and 5. 8+20+40+5=73. Now he, is the 8th letter, mem is the 11th, kaph is the 13th, and cheth is the 5th. 8+11+13+5=37.

So wisdom, has an ordinal value of 37, and a numerical value of 73. And creation, defined as 2701, factors to 37x73, the ordinal and numerical values of wisdom.

So when it says, "the world was created by wisdom," here it is represented numerically.

Here's the man who named "Googol" Google. Andy Betchtolsheim, was approached by Sergey and Larry, who told him about their magic search engine that they had named "Googol." Andy was in a hurry, and wrote a check to them for $100,000 and made it out to "Google, Inc." He bought into the company, and he didn't even need to see a business plan. Nine months later a VC gave them $25 million.

So think about it for a second. Larry and Serge, with a check for 100K, being college kids, and not having company documents--are you going to ask the guy that gave you the check (especially in a hurry “what if he changes his mind??) to cut you another one? No it will sit in the desk drawer for the next couple of weeks til you get the paperwork done, for your new company called “Google.” Now since Google is so successful, it is better to portray it as just a misspelling--- in a hurry--- of brilliant geniuses forming a company-but here's the story behind the name.

Now how was Googol named? A mathematician, Professor Edward Kasner of Columbia University asked his 9 year old nephew, Milton Sirota, what would be a name of a number with 100 zeros. The 9 year old said googol--and the name stuck--the name stuck for the number that is larger than all the “known” space in the universe, even broken down to the smallest particle known, named by a 9 year old kid.

One of the most important irrational numbers in math is e, the mathematical constant. It was so important to Google, that when they filed their offering documents, the decided to raise e! (see the post below.)

It is defined as e=limn->(1+1/n)n, it's the base of the natural logarithm, and next to pi, it's the most important constant in mathematics.

In Genesis 1:1, we find the most important mathematical expression, pi, when we convert the letters to the numbers as I have shown. In John 1:1, which also talks about creation, by converting the letters and the numbers with the same technique, we get the mathematical constant, e, of which Google filed to raise when they went public. (see the post below)

The number that represents Google, then is e. But Google had a name change, from Googol, thanks to the check from Andy. The difference? The letter e. And googol, also was named rather fortuitously, by a nine year old. The difference in the Google name? It is the e, and this difference, is what screamed out to buy the stock. Because the shift of the e, changed the numbers on the company Google, for those who understand the biblical numbers.

Why is that important? Because if it's important enough to change the name of the company, then the company, will obviously be important enough to change the way we do business.

And if it's important enough to change the way we do business, it's important enough for you to buy. And Google, unlike most IPO's was open to anyone with the money.

It was the one time that Wall Street didn't have an advantage over the public!

The above is John 1:1. The numbers work in Hebrew and in Greek, of which the Bible was written in the Old and New Testament. The creative agent of creation was the "word" or logos, as it is written Greek, and it adds to 373. In Genesis 1:1, Creation is defined in numbers as 2701, which has it's prime factors of 37x73. 2701 reversed and added gives you 3773. Why the palindrome? The palindrome DNA in your body assures you of your uniqueness. It's the same here, but it's simpler if you convert it to numbers. The world was created by wisdom, and wisdom in Hebrew in ordinal numbers adds to 37, and in the letters they represent adds to 73.

Now if I take the letters in John 1:1, and (multiply them together x the number of the letters), and then divide that by the (words multiplied x the number of the words), you get, e, the mathematical constant=2.718 x 10^40.

What's this have to do with Google? Google is the storehouse of information to the world, and it's success has delegated the word Googol to the dustbin. Google was fortuitously named, and GOOG's "number code" is e, or 2.71828828. And what if Google was just named Googol? You're back to the missing e!

Let's convert GOOGOL's English letters to their Greek equivalents. gamma, omicron, omicron, gamma, omicron lambda. It doesn't look like anything, unless you convert the Greek letters into their numerical value. Then you have this: 3 70 70 3 70 30. See googol, was named by a nine year old kid, because it defined what googol was. And Google's e? Well now you have epsilon, instead of omicron, a 5 instead of 70. It throws of the number scheme!

And isn't it ironic that Google's "number" is e, and it's also the number that was the clue that this would be a great stock. How is that? If you understand those numbers that are reserved for Biblical meanings, then you can understand how seeming random chances of fate, are pre-determined and known, by the author who states he is "the word of G-d."

So the check with the misspelled word? It wasn't fortuitous chance. And somewhere down the line, when Google decided to change their name from "Backrub" to Google, it was an Abram to Abraham moment.

And it is so obvious, and clear, that everyone misses it.

But Google had it's revenge. What's it's symbol? GOOG. Gamma omicron, omicron gamma. Convert those to numbers and you have 3 70 70 3. 3773! We're back to where we started!

It would be nice if we had tomorrow's stock picks today, but this "technique" is decidedly long term. I guess the Bible would be the ultimate long term holder.

And next time you see a "prophet with profits" on CNBC, make sure you can see his work. It will invite scepticism.

But if you gotten this far, take a look at this link. I mentioned this stock back in August when it was 125; it's now at 210. It also has the serendipitous numbers and circumstances favoring it's long term.

Friday, December 7, 2007

Extra! Extra! Morgan Stanley gives their projections for Europe! Just a couple of days ago they said we'll have "a housing recession like none ever imagined or experienced." I put a picture by that piece just so you wouldn't forget.

Look at this piece of "research" of their projections for European equities next year:

45% chance of negative returns.

35% chance of -19% return.

20% chance of a +28% melt-up!

So we could have a housing depression, but stocks could be down 19% or up 28%!

Isn't that a beauty? That's Wall Street research. Extra ! Extra! And you have to pay for this!

"When everyone is insolvent, no one is insolvent. If you took all of the loans in the SIVs and the CDOs and you looked where they really reside, if you look at where all the second-liens reside, if you opened up the books to everything, what you would see is massive insolvency across the board. And I am telling you to forget about it. When everyone is insolvent, no one is insolvent. Do you really think it matters?...

I have been saying that for months. It doesn't matter, at a certain point bad is good, and we are at that point. We are at the point I was hoping to avoid, which is a massive bailout of the system because Ben Bernanke got it wrong and stopped cutting in October. Now we will have to spend hundreds of billions of dollars one way or another -- maybe through the implicit guarantee of FNM/FRE -- to make sure the system just doesn't' stop, choked on bad mortgage loans. We have to do that because someone at the Fed said "not this time, we are not going to take rates back down to where the problems began," and they had to, and they got it wrong....."

Remember when Alliance Data Systems fell from 77 to 64 in a flash last week Thursday? The stock traded 33 million shares. Now the SEC is informally looking into the source of the "fishy" email, and it's pointing at one hedge fund in particular.

Here was the circulated email:

ADS getting pounded - hearing the board is now meeting on a revised proposal from Blackstone to acquire the company at $70/share, down from $81.50. Blackstone is negotiating a lower price due to weakness in World Financial Network - part of ADS’ Credit Services Unit, as evidence by awful master trust data this month from the WFN Holdings off-balance sheet credit vehicle.

Now we know this happens in specific stock cases, and it gets the Feds interested. How do you keep them off your back? Make outlandishly stupid bearish macro calls on the banking system, but guss it up in a report to show you have an "intellectual" basis for it.

And then when it is challenged, say how "outrageous and ridiculous" that is.

Concerned? People are "concerned" about their children; analysts are "concerned" when 30% of the float is shorted, and the stock doesn't come in to the hedge funds who are short the stock. So we get a research fluff piece, with a sell recommendation that is picked up and disseminated by NY Times.

The Postal Service did an audit, and found that sometimes the adhesive flap causes the mail systems to jam, and thus the NetFlix mailer has to be sorted by hand. The Citigroup analyst said that 70% of all Netflix's envelopes did this. (He probably did "channel" checks at the post office.) The Postal service estimates this costs them over $21 million a year; and they would like .17 cent surcharge when the machines jam. (Netflix says they save the Post Office $100 million a year by picking up the returns instead of having them delivered by mail to them.) So the report said if Netflix "has to bear the full brunt of this increase (without other cost offsets), monthly operating income per paying subscriber would fall 67 percent from $1.05 to 35 cents."

And this is the "scary" headlines, with the sell recommendation that is pinged around the street, not the offsetting paragraph that says this: "Given the magnitude of this risk” Netflix is most likely to “work towards resolving this issue by redesigning its mailers." How about a stronger adhesive on the flap?

Which is how Wall Street works. There are always two sides of an issue, but Wall Street shows the cards they want, when they want the stock to move in the direction they favor.

And if you don't do, what they say to do, when the issue, which is not an issue, is made to be an issue, you'll be better off!

Just like Goldman Sachs! I suppose if you lose $6 billion in a quarter, you need an excuse. So look at this gem Morgan Stanley came up with regarding the state of the housing market:

"The property derivatives market seems to be suggesting that we are in a very different environment, on the heels of market events that could force a housing recession like none ever imagined or experienced."

Just plain idiotic. I wonder if "ever imagined or experienced" included the Great Depression!

Here's why you needed a bailout on housing, and why home prices must go up. The bears realized this, and bet it would happen. But they bet wrong. Consider these facts: (It's back of the envelope, but I prefer to keep things simple.)

Housing "equity" was reported to be at a record low of 50.4%, which is home prices minus mortgage debt. Bulls will tell you that housing equity grew from $7.1 to $10.6 trillion the last 5 years. But equity is only at 50.4%. Why is that so alarming?

Approximately 1/3 of all homes are owned outright. So of the $10.6 trillion of equity, let's take 1/3 of it off. Since equity is at 50%, the value of homes is $21.2 trillion. 1/3 of homes are owned with no mortgages. So take $7 trillion off of $21.2 trillion, (.33X21.2 trillion=$7 T) and you have $14.2 trillion of homes with mortgages. Government figures say we had $10.6 trillion of equity, but $7 trillion is by those who own their homes. Subtract $7 trillion from $10.6 trillion, and you have $3.6 trillion as the equity component on $14.2 trillion, the value of homes with mortgages on it. $3.6/$14.2=25% equity in homes with mortgages. Now that is sobering!

That's why, the financials were so darn weak. Bears looked at the figures and bet their billions the system would be insolvent. Or at least they hoped it would, as they could then proclaim they were the masters of the universe. But if you buy some time, which this plan will, you'll be able to coax the previous homeowners, who are now renters, to get back and buy, while keeping inventory off of the market to stabilize prices. And you need lower rates, to incentivize buyers. And you'll get them.

Builder's can't sell homes when they are competing with short sales and foreclosures. The public homebuyer, is as unrealistic in pricing homes now, as the financial players were two weeks ago, when they should of been covering their shorts with both hands.

But greed and spreadsheets got the best of them. Remember all those writedowns on securities? Those prices are now going up! Why do you think the brokerage firms and investment banks wanted people to sell? So they could scoop up this inventory at cheap prices.And now, the market, slowly but surely, is delivering it's putative punishment to those who hold to their wayward viewpoints. It's the same in housing. Don't you want to buy a house at a distress sale? Of course you do. But how is it possible for everyone at the same time to buy a house at a distressed prices? If they could, you wouldn't have bragging rights. But that's what Wall Street wanted you to believe.

Now lets do some more math. What's the figure that gives those who own mortgages on homes a 40% equity position? We start with $3.6 trillion equity, so add $3.6 on it. Now you have $7.2 trillion equity on on $17.8 trillion, (14.2+3.6=17.8) or a 40% equity rate. (7.2/17.8=40.44%). The appreciation of homes then is 25%. ($3.6/$14.2 =25%.)

At that number, will there be any bailout? Of course not, because then it is economical for the bank to own your home. The bailout plan is for five years, so they hope housing appreciates at a 4.0456789% annual rate the next five years! It's as simple as 123, which are the only figures missing.

I put a picture of Schwarzenegger and gave you the script before it happened, just so you would remember it! I hope you followed it. The bears are so underwater, now they just send their emails to CNBC. As advertised!!

Wasn't it just a couple of days ago, that the journalists were breathlessly telling us that Lennar was selling land for .40 cents on the dollar? They probably didn't read what I said Sunday night:

Lennar blew out $525 million worth of land to Morgan Stanley. It was on the books for $1.3 billion. So look for reports that land is selling at 40 cents on the dollar. But is it? It's not.

Lennar will get about $250-300 million back from the Feds from taxes. So split the difference and add $275 million to the $525 million and you are up to $800 million. Lennar participates in the upside, and receives a property management fee. And they have a 20% interest in the venture. Even at the discounted sale rate of $525 million, that equates to $105 million. Now Lennar is up to $905 million, or .70 cents on the dollar. The shorts won't like the math, but Wall Street will. They've bought themselves time, cleaned up the balance sheet, and they have a partner with deep pockets.http://aaronandmoses.blogspot.com/2007/12/lennar-sells-some-lots.html

If you listened to them, you made nothing. The stock today is at $18.22 up $1.97 on the day, and up 20% since the low Monday!

Medicis applied to the FDA to sell Reloxin, providing competition with Allergan's botox.

With the writer's strike in Hollywood, and the furrowed brows worrying that the furlowed writers are now finding fans on blogs and videos on YouTube, I suppose this is Wall Street's bailout for the 90210 zip code.

But as of now, there's no word yet if Christian Slater will be the Reloxin spokesman!

Sunday night, National Geographic is going to have a special on the Hadrosaur found in North Dakota, by teenager Tyler Dawson. It's the best preserved dinosaur ever, with beautiful markings, and amazingly detailed skin. It supposedly would look like this. The rapid and swift burial of this dinosaur allowed it's preservation.

Monday, I was in Tampa, FL doing my own "investigative work" on WellCare (WCG 41.72) a stock that has gotten hammered from 120 after the FBI raided the company and seized documents. So far, nothing has come of it, they've gotten some contract renewals and I didn't see any smoking gun in the public documents that I saw.

That evening, while eating at Frenchy's Saltwater Cafe in Clearwater, I picked up a Tampa Tribune, off the table next to me, and there was a half page article about the Hadrosaur, and underneath it, was a half page ad from Wellcare, advertising for the services they are supposedly being investigated for. Maybe it was serendipitous, or maybe I was just being stupid, but the thought crossed my mind that the 200 agents that raided the company that sparked the speculation of it's demise, may allow it's preservation.

Anybody notice that Humana is also being investigated for some of their Medicaid practices? I'm not saying these companies are altruistic in any manner, but sometimes there can be confusion between elderly patients and the provider, and it wouldn't surprise me, if a fine and a hired do-gooder makes this thing go away.

Since the jobs report Friday was being called "the mother of all" economic forecasts this week, Joe Kernan of CNBC said that ADP's 189,000 jobs number could then be called the "mistress of all" forecasts this week.

I just wanted to remind everybody, that the "mistress" always looks good. So don't let her persuade you that the jobs number will be a bang up number too.

Last Thursday I mentioned Aluminum Co. of China (ACH 57.78) at 55.75 twice:

ACH (55.75) looks ready to move. China looks like it bottomed yesterday. Knowing that the Fed will cut will start to put the recession comments on hold. Just a few days ago China blamed the US for it's weakness. The US market rallied, and I think China rallies from here, and the volatility premium on the calls on ACH have come out significantly..

Now I think ACH goes to 62, and it does it by Tuesday. You have the bears pressing the market attempting to contain it at these levels. Bernanke speaks tonight, and he'll be supportive of lower rates. And that should help the overseas market, which in turn will help ours tomorrow. And ACH, should be a beneficiary of a non-recessionary viewpoint.

Now the whole world seems to be in agreement that the Fed will cut by Tuesday. So the next five points on this are easy.

Freeport McMoran (FCX 101.60) was touted by Cramer on Mad Money tonight. I mentioned this three times last three weeks:

On Wednesday:

FCX (93.91) which I've been pounding the table with, was accumulated all day today at 91, and it finally ran an hour before the close up $4.63 on the day. Today was designed to frustrate the holder of FCX stock. When the market ramps, the traders go with the stock that is moving. Tomorrow it will be easy. The stock should trade above 99, with a seven point range on the stock. If it opens down, grab it; it should be easy money.

And the week before at 88-89

They gave the stock away this morning. Don't lose your head when the market loses theirs.

Friday night, I said buy Countrywide, and I re-highlighted my buy on FRE on Sunday the week before:

Sunday night I had this to say about Freddie Mac:

So we know FRE took conservative marks, and that a $5 billion preferred offering should be done this week, and the stock, at 26.47 doesn't reflect this upside....So why buy FRE? Let's look to Goldman, who downgraded FRE to see why...The beauty of Goldman is how they manage clients and their own money. So Goldman downgraded FRE. Big deal. At these prices the preferred will be a home run. And six months from now we'll hear how Goldman saved Freddie. Sort of like heating your house by throwing your furniture in the fireplace. I'd vote against their downgrade. And buy the stock

Last time China Natural (CHNR 31.50 +14.57) ran, it moved from 13 to the 40's the first 4 days in October. Traders then moved money into China Direct (CDS 9.80) which moved 50% in two days, on tremendous volume, as a sympathy play on the move in China Natural. Here's your heads up, before they do it again.

This morning, Freidman Billings downgraded Fannie Mae (FNM 36.13) and cut their target to 30. Not to be outdone, Piper Jaffray downgraded Fannie and cut their target to 25. Not to be outdone by these smaller firms, Credit Suisse cut their target on Fannie to 25 and their target on Freddie Mac to 22!! That's research? That's just stupidity! But that's how Wall Street works!

There is not one reason that any of these firms gave, that we don't already know. That means all this news is already factored into the price of the stock. What happened to the stocks today? Fannie closed up a dollar, and Freddie (FRE 34.67) closed up 2.36. And after the close, Fannie announced that their preferred offering was way over-subscribed, and tomorrow we have a deal on freezing sub-prime mortgage rates.

Now we have some people who pride themselves on never getting into a financial mess, complaining that they are rewarding irresponsible home buyers. Maybe they should work for Credit Suisse. Keeping these homes off the foreclosure market will help increase the value of their home. But they won't think about that, because the complaint, is really from those who are short, who won't profit when financial calamity is avoided.

"Orange County, California, bankrupted in 1994 by bad bets on interest rates, bought structured investment vehicles similar to those that caused a run on funds invested by local governments in Florida.

Twenty percent, or $460 million, of the county's $2.3 billion Extended Fund is invested in so-called SIVs that may face credit-rating cuts, said Treasurer Chriss Street. In all of its funds, the county holds a total of $837 million of SIV debt, including $152 million in its $3.5 billion of money-market funds that isn't under ratings review, said his spokesman, Keith Rodenhuis."